Avaya Pledges Continued Overhaul

Avaya is pushing forward with a three-year overhaul it began by going private last year by improving operational efficiency and shifting product development to focus more on the needs of end users, according to interim Avaya CEO and incoming chairman Charles Giancarlo.

The company, which has undergone significant leadership and product changes in the last several years to become an IP telephony and unified communications powerhouse, is increasingly designing its products with usability and the ability to integrate with other applications in mind.

Avaya wants to take its cue from Apple. "Apple's shown what you can do with the same set of functions but really focus on how people access those things," Giancarlo said in an interview. "For generations, I would say that the focal point for our development efforts has been for either the telecom manager or the network manager. The vendors have done a very poor job of designing these systems for the ultimate end users."

Now, for example, Avaya is building IP telephony and unified communications systems that will be able to integrate into other applications employees and other users might actually use, from applications with open APIs like Google's Web apps to proprietary lines of business applications. Other companies, including Microsoft and IBM, are also focusing on app integration in their unified communications strategy.

In terms of internal progress, Giancarlo presented a progress report to employees and equity partners last month. In the first year of private ownership (Avaya was bought by Silver Lake Partners and TPG Capital last year), Avaya has changed its entire sales structure, shifted its service management strategy, and begun to make changes in project development processes. "The company was not, and still is not, as efficient as it could be, but we're making progress," Giancarlo said.

Guiding Avaya through the next phase of its transition will be incoming CEO Kevin Kennedy, who is resigning his post as CEO of troubled optical networking manufacturer JDSU. Kennedy and Giancarlo worked together at Cisco and know each other well. Kennedy also worked at the AT&T group that went on to become Avaya as a director of marketing and was briefly CEO of messaging software company Openwave.

"What a great background to come into Avaya with at this time with a looming recession," Giancarlo said. "He understands the industry, understands how to run a company well, and understands how to run a company in a tough economic situation."

The next year will be marked by ironing out the wrinkles in the change in operations strategies and getting employees to "understand how to work within the environment." If that's successful, Giancarlo expects to see Avaya begin to undergo a significant amount of growth relative to the economy and pick up market share against competitors.

Among those competitors is Cisco, a company where Giancarlo worked as a top executive until last year. Since coming to Avaya, he said, his view of Cisco has not shifted too much -- "it's an execution machine" -- but his view of Avaya vis-à-vis Cisco has changed.

"When I was at Cisco I thought Avaya could hold on to its existing customers because of installed-base economics, not because of technical prowess, but now that I'm here, I see that that's absolutely not the case," he said. "Customers get to see both, and it's a jump ball, and not only is Avaya in the hunt, but we win a large number of them."

Giancarlo said Avaya has the opportunity to compete so strongly against Cisco because Cisco ties so much of what it does to the rest of the network, whereas Avaya can take a laser focus on telephony and the call center. While Cisco aims at the network operator or the network manager, Avaya can really hone in on needs of end users, he said.

Despite Giancarlo's positive view of Avaya's future, he admitted the economy makes things a bit less certain. "It's a difficult environment for customers to predict as well as for the industry as a whole," he said, predicting shifts in market share in the industry and a wave of consolidation.